Conflicts and rural banditry have been a challenge in Nigeria for decades, especially in resource-rich parts of the country. The menace has been traced to the increasing challenge of poverty, unemployment and poor exploitation of resources. In Zamfara, a northwestern state in Nigeria, thousands of lives have been lost to banditry, which the government believes has been re-enforced by illegal mining. In a bid to address this, the Nigerian government directed that mining activities in Zamfara and other affected states in the country be suspended with immediate effect, citing “intelligence reports that have clearly established a strong and glaring nexus between the activities of armed bandits and illicit miners”. While this is a move to end the killings, it puts the budding mining sector at risk.
Since the news, we have been inundated with phone calls and emails from sector stakeholders, especially the honest and hardworking miners and investors in Zamfara, who are worried sick about what could happen following the Nigerian government’s directive. With just one negative headline, the investments and hard work of several years can be permanently frustrated.
Informal/illegal mining is not new in Nigeria. In fact, it is rampant in several parts of the world. This is because while global extraction trends show that mining operation size matters, it won’t give much needed employment numbers. This reality has made informal mining thrive in several countries of the world, especially places with high poverty rates.
In Nigeria, artisanal or small-scale mining (ASM) is presently largely (<90%) informal, but it offers opportunities for poverty reduction and decent employment. More than 500,000 households (2-4 million people) in the country depend directly or indirectly on artisanal mining for their sustenance. This is similar in several mining economies. As a result, global mining giants have been working with civil societies and governments to find an alternative to banning artisanal mining, an unsustainable option because millions of people rely on it for their livelihood. Rather, they have been collectively working on programmes designed to bring the, often informal artisanal mining sector, into the formal economy in ways that benefit miners, their communities, the mining sector, as well as their national economies. Such programmes involve registering artisanal miners, helping them organise themselves into associations and co-operatives, and establishing a set of auditable standards for environmentally and socially responsible artisanal mines. This is what Kian Smith has been working on achieving in Nigeria, a country that has many compelling reasons to develop its mining sector.
Despite its economy being the largest in Africa and 21st largest in the world, with a labour force of about 80 million people, poverty level in the country is still high. Unemployment is above 23 percent and national average poverty rate is at 46 percent, with the incidence of poverty (headcount index) highest in some of the mining states of northern Nigeria.
Statistics show that the states with high levels of poverty — Zamfara, Kebbi, Kaduna, Niger, Gombe, Taraba and Niger — have rich mineral endowments and vast ASM activity.
We are concerned that with Zamfara being the highest Nigerian state on the poverty level Index, suspending an important source of income to an already impoverished state may further fuel the insecurity crisis with the inclusion of other criminal activities for sustenance.
Another concern we have is about the Nigerian government handicapping the mining industry and development of Zamfara state by announcing a directive that might see the country indirectly blacklist itself as a mining destination in the world. We believe there are better ways to tackle the insecurity concerns which really stem from poverty.
Is poverty driving ASM or is ASM prolonging the cycle of poverty? It is the area of highest productivity (as we mentioned, 90 percent of the sector’s activity is ASM) in the sector, but least documented contribution to public revenue. How can we tackle the issue of poverty and also increase public revenue? Like most mining economies are beginning to realise, stopping ASM activities is not an option.
By registering artisanal miners as businesses, offering to pay their royalties, building their capacity and giving them transparent and fair markets, Kian Smith Trade & Co. is involved in proffering solutions to the perceived threats by artisanal mining and ensuring the economic impact of their activities is felt. In the last two months, we have registered over 100 artisanal miners with the Corporate Affairs Commission (CAC) as businesses. We have also assisted 72 miners open accounts with Stanbic IBTC Bank PLC. Starting next week, we will be assisting many others to open accounts with Zenith Bank PLC. We receive calls daily from Zamfara, mostly from miners and dealers looking for assistance in legalizing their businesses and building their capacity.
The cooperation we have enjoyed from these miners, dealers and bankers assures us that despite the violent clashes being reported, people working in the mining sector in Zamfara and other areas that have witnessed violence linked with mining, are hungry for a holistic intervention and want to become a notable part of the gold economy of Nigeria, which Kian Smith is working assiduously to help build.
Meanwhile, Kian Smith continues to source gold from various sources ahead of the June 2019 opening of Nigeria’s first ever gold refinery. We know our Zamfara supply line will have to be suspended for the duration of the security operations in the area or when the government lifts suspension on mining activities in the state. We hope this happens soon, so that the people of Zamfara can continue to enjoy the value we have been able to bring by sourcing gold for our refinery locally.
Kian Smith will continue to work with development organisations, both locally and internationally, to ensure due diligence and safety of miners, as well as curb illegal mining in Nigeria.